GoPro To Layoff 200 Employees Following Karma Drone Recall

GoPro, maker of the popular range of wearable action camera, revealed that it is laying off 15 percent of its workforce and closing its entertainment business, which makes original content for the company and its products.

GoPro Layoff

The announcement, which was issued last Nov. 30, included the dismissal of 200 full-time positions, and this number is further expanded as some workers occupying open positions were also given their walking papers.

GoPro's workforce used to be constituted by at least 1,500 employees.

The latest round of layoffs follows a previous cull undertaken in the beginning of 2016, which saw GoPro shed 7 percent of its staff. These are officially phrased as part of a strategy to maintain the company's profitability.

Rise And Fall Story

GoPro has been one of the darlings of the business world after it went public in 2014. Investors have been bullish about its market prospects, particularly with respect to how its products use social media as a marketing and sales platform.

However, the entry of cheaper action cameras and the increasing sophistication of imaging technologies in smartphones have affected its recent sales performance.

According to Reuters, its camera business sustained a consistent decline in the past four quarters while its market value has also plummeted by 60 percent since its debut.

Trouble Ahead

It also seems that the current cost-cutting happening in the company will not immediately diminish brewing troubles ahead. To underscore this, one can turn to its on-going recall of 2,500 Karma drones.

GoPro has received numerous complaints that the drone abruptly loses power mid-air, causing it to crash. Aside from a refund, the company is now offering Hero5 Black camera in exchange for a recalled Karma drone.

"We are working in close coordination with both the U.S. Consumer Product Safety Commission and Federal Aviation Administration," Nicholas Woodman, CEO and GoPro founder, said. "We are very sorry to have inconvenienced our customers and we are taking every step to make the return and refund process as easy as possible."

The recall is expected to affect GoPro's revenue this year.

"GoPro was struggling as an action cam specialist, which is why it needed an alternative market," Tom Morrod, consumer electronics director at IHS consultancy, told BBC. "The Karma drones were their recover strategy, and when they had to be recalled it faltered."

Reports also reveal that GoPro's president, Tony Bates, will step down at the end of the year. It is not yet clear how this development will be received by the market.

On GoPro's Recovery

It is important to note that GoPro's shares got a 4.7 percent uptick after the news of the layoff was leaked. GoPro is also underscoring that its cameras performed well last November, particularly during the Black Friday sale. The company is also expected to cash in this coming holiday season.

"We are headed into 2017 with a powerful global brand, our best ever products, and a clear roadmap for restored growth and profitability in 2017," Woodman said in an official statement.